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REG-TCS Group Holding PLC Correction: TCS Group Holding PLC Announces 1Q 2018 IFRS Results and 2nd Interim Dividend

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   TCS Group Holding PLC (TCS)
   Correction: TCS Group Holding PLC Announces 1Q 2018 IFRS Results and 2nd
   Interim Dividend

   30-May-2018 / 10:25 MSK
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

   ══════════════════════════════════════════════════════════════════════════

   Correction: TCS Group Holding PLC Announces 1Q 2018 IFRS Results and 2nd
   Interim Dividend

   Dividend figure corrected in the CEO quote to USD 43.8 mn.

    

   Moscow, Russia - 30 May 2018. TCS Group Holding PLC (TCS LI) (the
   "Group"), Russia's leading provider of online retail financial services
   via its Tinkoff.ru financial supermarket, today announces its interim
   condensed consolidated IFRS results for the first three months ended 31
   March 2018.

    

   KEY FINANCIAL HIGHLIGHTS

    

   1Q 2018

    

     • Net margin up 44% y-o-y to RUB 14.0 bn (1Q17: RUB 9.8 bn)
     • Profit before tax up 68% y-o-y to RUB 7.4 bn (1Q17: RUB 4.4 bn)
     • Net income up 70% y-o-y to RUB 5.7 bn (1Q17: RUB 3.4 bn)
     • ROE increased to 68.5% (1Q17: 42.8%)
     • Net interest margin at 25.5% (1Q17: 26.2%)
     • Cost of risk decreased to 7.5% (1Q17: 7.6%)

   All balance sheet numbers and ratios as of 31 March 2018 below are
   compared with corresponding numbers and ratios as of 1 January 2018 and
   have been compiled in accordance with IFRS 9. All changes shown for
   comparative numbers and ratios also reflect the transition to IFRS 9.

    

     • Total assets increased by 2.5% to RUB 265.8 bn (1 Jan'18: RUB 259.3
       bn)
     • Gross loans and advances to customers up 5.9% to RUB 176.4 bn (1
       Jan'18: RUB 166.7 bn)
     • Net loans and advances to customers up 7.8% to RUB 139.8 bn (1 Jan'18:
       RUB 129.7 bn)
     • Share of non-performing loans (NPLs) at 12.6% (1 Jan'18: 13.4%)
     • Customer accounts increased by 1.8% to RUB 182.3 bn (1 Jan'18: RUB
       179.0 bn)
     • Total equity increased by 8.3% to RUB 34.8 bn (1 Jan'18: RUB 32.1 bn)

   KEY HIGHLIGHTS FOR 1Q 2018

    

     • In 1Q18 over 370k new active credit card customers were acquired,
       underpinning net loan growth of 7.8%
     • In February 2018, Tinkoff Bank announced the opening of a development
       hub at the Skolkovo innovation centre to focus on delivering new
       business solutions based on blockchain, as well as voice and face
       recognition technologies. The Group now has 9 development hubs across
       Russia.
     • Tinkoff Bank's website was named the best mobile website among Russian
       banks, according to a review by Google and CXPartners
     • In March 2018, Tinkoff Bank was issued a professional securities
       market participant licence by the Bank of Russia to provide brokerage
       and depositary services, thus allowing the Bank to further develop its
       comprehensive investment platform and expand its range of investment
       products
     • The Bank was recognised as the leader among top 30 Russian banks by
       the number of customer loyalty programmes based on the Bank Customer
       Loyalty Programmes 2018 survey conducted by Markswebb
     • Strong new business development for the reporting period included the
       launch of multicurrency Tinkoff Black cards and premium Black Edition
       programme

    

   KEY HIGHLIGHTS POST 1Q 2018

    

     • Tinkoff Bank's market share increased to 11.7% as of 1 May 2018,
       further solidifying its position as Russia's second largest credit
       card issuer.
     • The Bank of Russia has recognised Tinkoff Bank as a significant credit
       institution in the payment services market and added it to the
       relevant register now numbering 36 financial institutions
     • Following the issue of a professional securities market participant
       licence, Tinkoff  Bank re-launched its Tinkoff Investments brokerage
       platform, offering customers a breadth of new capabilities to enable
       faster and more technologically advanced securities trading
     • Tinkoff Bank was a general partner of the St. Petersburg International
       Economic Forum (SPIEF), which took place in St. Petersburg, Russia on
       24-26 May
     • Tinkoff Bank and the Talent and Success Foundation signed an agreement
       to launch a development hub at Sirius educational center and to
       cooperate in a number of areas, including joint R&D projects and
       working towards a better regulatory framework to support innovation
     • Tinkoff Bank and SME Bank signed a cooperation agreement for Tinkoff
       Bank to become SME Bank's agent for transaction support services with
       regard to the partner's SME lending programmes

    

   Second 2018 Interim Dividend Announcement

    

   In line with the Group's dividend policy, the Group's Board of Directors
   yesterday

   approved a second 2018 interim gross dividend of USD 0.24 per share/per
   GDR (with each GDR representing one class A share) with a total amount
   allocated for dividend payment for Q1 of around USD 43.8 mn.

    

   Subject to London Stock Exchange regulations, indicatively the dividend
   will be payable on 21 June 2018 to those shareholders on the register as
   at the record date of 15 June 2018. The ex-dividend date will be 14 June
   2018.

    

   According to the terms of the GDR deposit agreement, holders of the
   Group's GDRs should receive their dividends approximately 5 business days
   after the payment date.

    

   Oliver Hughes, CEO of Tinkoff Bank, commented:

    

   "In the first quarter we delivered strong net income of RUB 5.7 billion
   underpinned by 44% year-on-year growth in net interest income.  We also
   showed a solid 113% year-on-year increase in total fee and commission
   income reflecting successful expansion of new business-lines such as
   Tinkoff SME and Tinkoff Mortgage. With ROE at 68.5% for 1Q 2018, we remain
   one of the most profitable banks globally.

    

   "We continue to actively expand our non-credit business-lines.  We have
   deepened integration of partner products and services such as Booking.com
   and Afisha restaurants through our award-winning mobile app and
   Tinkoff.ru platform, as we build out our ecosystem
   for lifestyle-related spending. We are also developing our investment
   platform and widening the range of investment products, after receiving a
   professional securities market participant license from the CBR in March.

    

   "Continued robust growth of our core lending business, combined with our
   goal to remain at the forefront of fintech services globally, requires
   top-flight human resources. To achieve this, we continue to attract local
   programming expertise through regional development hubs including
   Skolkovo, Russian institutions of higher education and other organisations
   supporting local IT talent and education. Our most recent partnership is
   with the Talent and Success Foundation, which will partner with us
   in applied research to harness the power of artificial intelligence and
   machine learning.

    

   "Five months into 2018, I am happy to confirm that the Group is well on
   track to deliver the full-year targets that were previously communicated
   to the market.  In line with our dividend policy, the Board approved a 1Q
   2018 interim dividend of USD 43.8 mn."

    

    

   FINANCIAL AND OPERATING REVIEW

    

   RUB bn                                 1Q18 1Q17 Change
   Credit cards issued ('000 pcs)          520  450   +16%
   Credit card                            78.6 54.5   +44%
   transactions
   Net margin                             14.0  9.8   +44%
   Net margin after credit loss allowance 10.8  7.4   +46%
   Profit before tax                       7.4  4.4   +68%
   Net income                              5.7  3.4   +70%

    

   RUB bn                              31 March 1 Jan 2018 Change
                                           2018
   Total Assets                           265.8      259.3  +2.5%
   Net loans and advances to customers    139.8      129.7  +7.8%
   Cash and treasury portfolio             96.0       96.3  -0.3%
   Total Liabilities                      231.0      227.1  +1.7%
   Customer accounts                      182.3      179.0  +1.8%
   Total Equity                            34.8       32.1  +8.3%
   Tier 1 capital ratio                   17.0%      17.7% -0.7pp
   Total capital ratio                    17.0%      17.8% -0.8pp
   CBR N1.0 (capital adequacy ratio)      16.7%      16.3% +0.4pp

    

    

   The Group delivered another strong set of results for 1Q18 following
   accelerating growth of its core credit card business and the excellent
   performance of its new business lines.

    

   As a result, the Group reported a net income for 1Q18 of RUB 5.7 bn, which
   translated into ROE of 68.5%.

    

   In 1Q18, the Group issued 520k new credit cards.  The total volume of
   credit card transactions in 1Q18 increased by 44% y-o-y to RUB 78.6 bn
   (1Q17: RUB 54.5 bn).

    

   In 1Q18, gross interest income grew by 37% y-o-y to RUB 17.7 bn (1Q17: RUB
   12.9 bn), driven by growth in both the loan book and securities portfolio.
   Gross interest yield decreased slightly to 38.0% in 1Q18, while the
   interest yield on the Group's securities portfolio came in at 6.8%.

    

   In 1Q18, interest expense grew by 16% y-o-y to RUB 3.4 bn (1Q17: RUB 3.0
   bn). The cost of borrowing fell to 6.4% in 1Q18 as a result of continued
   decrease in the deposit rates and growth of individual and SME current
   accounts share in the funding structure.

    

   In 1Q18, net margin grew by 44% y-o-y to RUB 14.0 bn (1Q17: RUB 9.8 bn).
   The net interest margin (NIM) stood at 25.5% in 1Q18 (1Q17: 26.2%).

    

   The Group continues to focus on controlling its cost of risk and
   efficiently managing the quality of its portfolio. Cost of risk was almost
   flat at 7.5% (1Q17: 7.6%), while the risk-adjusted net interest margin
   slightly decreased to 19.6% in 1Q18 (1Q18: 19.9%), both post-IFRS 9.

    

   The Group continues to develop its new business lines, all of which are
   demonstrating robust growth, with the SME business performing
   exceptionally well and contributing to the bottom line. In 1Q18, the
   Group's fee and commission income increased by a remarkable 113% y-o-y to
   RUB 5.8 bn (1Q17: RUB 2.7 bn).

    

   At the end of 1Q18, the Group had nearly 3.1 mn current account customers
   with a total balance of over RUB 78 bn across all their accounts. The
   Group's SME business has grown its customer base to over 292k SME
   customers in 1Q18, with RUB 23.9 bn in total on their current accounts.

    

   The Group continues to develop its mortgage platform in partnership with
   11 banks, through which it originated over RUB 4.6 bn of mortgage loans in
   1Q18. The mortgage business has seen its market share steadily increase
   quarter-on-quarter.

    

   Tinkoff Investments continues to demonstrate robust growth and hit 100K
   brokerage accounts on 14 May 2018. Following the launch of the Tinkoff
   Investment's own brokerage platform in 2018, the Group expects the
   business line to break even in late 2018.

   In 1Q18 operating expenses increased by 61% year-on-year due to  continued
   growth of  acquisition expenses.  The cost-to-income ratio was  stable  at
   42.6% in 1Q18 (1Q17: 42.7%).

   The Group reported net income of RUB 5.7 bn (1Q17: RUB 3.4 bn). As a
   result, ROE for the reporting period reached 68.5%.

    

   In 1Q18 the Group continued to maintain a healthy balance sheet with total
   assets remaining firm at RUB 265.8 bn (1 Jan 18: RUB 259.3 bn).

    

   In 1Q18 the Group's gross loan book grew by 5.9% to RUB 176.4 bn (1 Jan
   18: RUB 166.7 bn), while the net loan book grew by 7.8% to RUB 139.8 bn (1
   Jan 18: RUB 129.7 bn).

    

   In 1Q18, the Group's NPL ratio came to 12.6%, as a result of adoption of
   IFRS 9 methodology. The Group's loan loss provision coverage stood at 1.6x
   non-performing loans.

    

   The Group's customer accounts increased by 1.8% YTD to RUB 182.3 bn (1 Jan
   18: RUB 179.0 bn).

   In 1Q18, the Group's total equity increased by 8.3% to RUB 34.8 bn (1 Jan
   18: RUB 32.1 bn). As of 1 April 2018, the Group's statutory N1.0 ratio was
   up at 16.7% and its N1.2 ratio had increased to 14.8%. N1.1 stood at a
   comfortable 10.4%.

    

   LAUNCH OF TENDER FOR EXTERNAL AUDITOR OF THE GROUP

    

   The Group announced in Q4 2017 it intended to conduct an audit tender
   during 2018, in the context of the EU Regulation on audit reform of public
   interest entities. 

    

   A competitive tender process, open on equal terms to registered audit
   companies that have the required industry expertise and resources in
   addition to meeting the statutory requirements and the professional
   standards, including the current external auditors, PwC, overseen by the
   Audit Committee of the Company, will be launched in the coming days with a
   view to identifying and appointing external auditors of the Group for
   accounting periods commencing on 1 January 2019 and thereafter.

    

   ***

   The management team will host an investor and analyst conference call at
   15:00 UK time (17:00 Moscow time, 10:00 U.S. Eastern Standard Time), on
   Wednesday, 30 May 2018.

   The press release, presentation and financial statements will be available
   on the Tinkoff website
   at  1 https://www.tinkoff.ru/eng/investor-relations/results-and-reports/

   To participate in the conference call, please use the following access
   details:

   Conference ID
                                        7987458
    
   Russian Federation - Local           +7 495 646 9190
                                        8 10 8002 8675011 
   Russian Federation - Toll Free
                                         
                                        +44 (0)330 336 9411 
   United Kingdom - Local
                                         
                                        0800 279 7204
   United Kingdom - Toll Free
                                         
                                        +1 323-794-2423
   United States of America - Local
                                         
                                        800-289-0438
   United States of America - Toll Free
                                         

   A live webcast of the presentation will be available
   at  2 http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5579

    

   Please register approximately 10 minutes prior to the start of the call.

    

   For enquiries:
                                 Tinkoff Bank
   Tinkoff Bank
                                 Larisa Chernysheva
   Darya Ermolina                IR Department
   Head of PR
                                 + 7 495 648-10-00 (ext. 2312)
   + 7 495 648-10-00 (ext. 2009)
                                  4 ir@tinkoff.ru
    3 d.ermolina@tinkoff.ru
                                  

   About the Group

   TCS Group Holding PLC is an innovative provider of online retail financial
   services operating in Russia through a high-tech branchless platform. TCS
   Group includes Tinkoff Bank, mobile virtual operator network Tinkoff
   Mobile, Tinkoff Insurance, and Tinkoff Software DC, a network of
   development hubs across Russia.

   The Group was founded in 2006 by the Russian entrepreneur Oleg Tinkov and
   has been listed on the London Stock Exchange since October 2013.

   With no retail branches, the Group serves its customers remotely via
   online channels and its call centre and operates a network of over 2,500
   representatives to ensure smooth delivery of its products. The network
   covers all of Russia and allows next day delivery to most customers.

   The Group's key business is Tinkoff Bank, Russia's first and only direct
   bank offering both own brand and partner retail financial services via its
   Tinkoff.ru platform. The product range includes daily banking (credit and
   debit cards, payments, money transfers), savings, investments, loyalty
   programmes, travel services, SME services, mortgage platform, and
   insurance. With its special focus on mobile business, the bank offers
   mobile applications both for its customer base (Mobile Bank) and beyond it
   (Traffic Fines, MoneyTalk, Card 2 Card instant money transfers).

   As at 1 May 2018, the bank was the second largest player in the Russian
   credit card market, with a market share of 11.7%. The 1Q18 IFRS net income
   of TCS Group Holding PLC amounted to RUB 5.7 bn, ROE grew to 68.5%.

   Banki.ru, Russia's largest financial news portal, named Tinkoff Bank the
   Bank of the Year 2016. In October 2016 Tinkoff Bank was named the largest
   independent global direct bank by Frost & Sullivan. In 2015 and 2016, the
   Global Finance magazine named Tinkoff Bank as the Best Consumer Digital
   Bank in Russia. In 2016, the bank also won Global Finance's Best
   Integrated Consumer Bank Site award and was named the Best Digital Bank in
   the CEE by Euromoney. The bank's mobile application was recognised as the
   best in Russia by Markswebb Rank & Report for three consecutive years in
   2014, 2015 and 2016, and by Deloitte for four consecutive years from 2013
   to 2016.

    

   Forward-looking statements

   Some of the information in this announcement may contain projections or
   other forward-looking statements regarding future events or the future
   financial performance of the Group and Tinkoff Bank. You can identify
   forward looking statements by terms such as "expect", "believe",
   "anticipate", "estimate", "intend", "will", "could," "may" or "might", the
   negative of such terms or other similar expressions. The Group and Tinkoff
   Bank wish to caution you that these statements are only predictions and
   that actual events or results may differ materially. The Group and Tinkoff
   Bank do not intend to update these statements to reflect events and
   circumstances occurring after the date hereof or to reflect the occurrence
   of unanticipated events. Many factors could cause the actual results to
   differ materially from those contained in projections or forward-looking
   statements of the Group and Tinkoff Bank, including, among others, general
   economic conditions, the competitive environment, risks associated with
   operating in Russia, rapid technological and market change in the
   industries the Group operates in, as well as many other risks specifically
   related to the Group, Tinkoff Bank and their respective operations.

    

    

   ══════════════════════════════════════════════════════════════════════════

   ISIN:          US87238U2033
   Category Code: QRF
   TIDM:          TCS
   LEI Code:      549300XQRN9MR54V1W18
   Sequence No.:  5596
   EQS News ID:   690769


    
   End of Announcement EQS News Service

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References

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   3. mailto:d.ermolina@tinkoff.ru
   4. mailto:ir@tcsbank.ru


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